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Banking Commission of Inquiry Bill 2016

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2016

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

Banking Commission of Inquiry Bill 2016

 

 

 

EXPLANATORY MEMORANDUM

and

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

 

 

 

 

 

 

Circulated by authority of

Bob Katter



Banking Commission of Inquiry Bill 2016

 

 

OUTLINE

 

The bill seeks to establish and Banking Commission of Inquiry. It will hold the same powers as a Royal Commission.  A Commissioner will be appointed by the Treasurer to conduct the enquiry. The Terms of Reference will address:    

 

1)       ADIs not passing on full cuts to the cash rate to the customer,

 

2)       ADIs home loan practices in relation to:

 

a.       lending where the margins are excessive,

 

b.       entering into home loans under which the ADI may recover more than the value of the secured property,

 

c.        making loans that the borrower could not reasonably be expected to service,

 

d.       ADIs “selling on” loan debt contacts and agreements to outside entities.

 

3)       The culture of remuneration for ADI directors and managers.

 

4)       The legislative adoption and practice of non-recourse lending and its implications,

 

5)       The legislative regulation of mortgage insurance,

 

6)       The establishment of a tribunal with the critical powers needed as follows:

                                i.             oversight and ensure prudential and responsible behaviour by ADIs and their directors, senior managers and staff; and

 

                              ii.             provide Legal Aid to parties injured or potentially injured.

 

FINANCIAL IMPACT

 

The bill will have no financial impact.

 

NOTES ON CLAUSES

 

Clause 1 - Short title

This clause is a formal provision and specifies the short title of the Bill as the Banking Commission of Inquiry Act 2016

 

Clause 2 - Commencement

This clause provides for the commencement of Sections 1 to 2 of the Act the day the Act receives Royal Assent, and the commencement of Sections 3 to 10 on the day the Consolidated Revenue Fund is appropriates under an Act to the Treasury to fund the Banking Commission of Inquiry.

 

Clause 4 - Definitions

This clause sets out definitions. Specifically the term ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959 .

 

Clause 5 - Banking Commission of Inquiry is established



Subsection (1) of this clause is the appointment of a person to conduct the Inquiry in the role of ‘Commissioner’.

 

Subsection (2) of this clause establishes the appointment must be notifiable by instrument.

 

Subsection (3) of this clause provides the timeframe of the appointment to take effect.

 

The Treasurer must, within 6 weeks after the Governor General in Council assents to this Act, appoint persons to:

            (a)        conduct an inquiry into the matters specified in section 6; and

            (b)        report to the Treasurer on the matters (including any recommendations relating to the matters) within 6 months after the Governor General in Council assents to this Act.

 

Subsection (4) of this clause asserts the Commissioner’s findings do not carry the power to be ratified into legislation.

 

Subsection (5) of this clause asserts the members of the Commission have the same Parliamentary Privilege as Members of the House of Representatives.   

 

Clause 6 - Terms of Reference 

This clause outlines which matters the Commissioner is to inquire as follows:

 

Subsection (A) of this clause outlines the matter to inquire into if, and how ADIs benefit from not passing on the full cuts to the cash rate on to Home loan borrowers

 

Subsection (B) of this clause outlines the matter to inquire of any mechanisms that can be used to limit ADI lending where the margins are excessive

 

Subsection (C),(D) of this clause outlines the matter to inquire into what extent ADIs create home loans where it can recover more than the property assets and how can this practice can be eradicated.

 

Subsection (E), (F) of this clause outlines the matter to inquire into what extent ADIs make loans the borrower cannot identifiably service  and how can this practice can be eradicated.

 

Subsection (G), (H), (I) of this clause outlines the matter to inquire into what extent ADIs “sell on” loan agreements to another entity and if so, does Australian law comply and how can this practice can be eradicated.

 

Subsection (J) of this clause outlines the matter to inquire if the remuneration received by directors and senior managers of ADIs are structured so as to ensure that the ADI not only generates profits to shareholders, but also behaves responsibly and fairly in relation to the customers of the ADI and the broader Australian economy and community; and

 

Subsection (K) of this clause outlines the matter to inquire if the remuneration received by senior managers and directors of ADIs are

                                                        I.             Behaves responsibly and fairly to shareholders, customers and the broader economy

                                                      II.             Proportionate  to the benefits received by the shareholders, customers and to the broader economy

                                                    III.             Are genuinely awarded for competency in management

                                                    IV.             Are proportionate to competencies

                                                      V.             Proportionate to the management  in the  wider, (commercial) Australian community

 

 

Subsection (L) of this clause outlines the matter to inquire the issue in to the legislative adoption of non-recourse lending.

 

Subsection (M) of this clause outlines the matter to inquire the issue of legislative regulation of mortgage insurance.

 

Subsection (N) of this clause outlines the requirement of the inquiry to establish a tribunal with the critical powers needed as follows:

                                                        I.             oversight and ensure prudential and responsible behaviour by ADIs and their directors, senior managers and staff; and

 

                                                      II.             provide Legal Aid to parties injured

 

Clause 7 - Hearings

Subsection (1) of this clause is the power of the Commissioner to carry out hearings for the purpose of the inquiry.

 

Subsection (2) of this clause is the location of the hearings may be determined by the Commissioner.

 

Subsection (3) of this clause is the procedure of the hearings may be determined by the Commissioner and Subject to the Act.

 

Clause 8 - Commissioner not bound by the rules of evidence

The Commissioner may inform himself or herself on any matter in such a manner as he or she thinks fit.

 

Clause 9 - Application of the Royal Commissions Act 1902

The Banking Commission of Inquiry is subject to the Royal Commissions Act 1902 in the following instances:

            (a)        the Banking Commission of Inquiry were a Royal Commission; and

            (b)        the Commissioner were a member of a Royal Commission.

            (2)        The regulations may, for the purposes of the application of section 9 of the Royal Commissions Act 1902 in accordance with subsection (1) of this section, provide for or specify matters of the kind referred to in subsection 9(2) of that Act.

 

            (3)        Section 9 of the Royal Commissions Act 1902, in its application in accordance with subsection (1) of this section, has effect as if those regulations were regulations made for the purposes of subsection 9(2) of that Act.

            (4)        Sections 10 and 15 of the Royal Commissions Act 1902, in their application in accordance with subsection (1) of this section, have effect as if references in those sections to offences against that Act included references to such offences as apply in accordance with subsection (1) of this section.

 

Clause 10 - Application of laws relating to disclosure 

Commonwealth law that relates to the disclosure of information applies to disclosure of information to the Banking Commission of Inquiry.

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Banking Commission of Inquiry Bill 2016

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the Bill

 

The bill seeks to establish and Banking Commission of Inquiry. It will hold the same powers as a Royal Commission.

 

Human rights implications

 

This Bill does not unacceptably limit any of the applicable rights or freedoms.

 

Conclusion

 

This Bill is compatible with human rights as it does not raise any human rights issues.

 

 

Hon Bob Katter MP